The number of mortgage approvals for house purchases edged up marginally in June, but has dropped sharply since the start of the year because of stricter lending policies and a fall in demand.

While approvals rose 3.3pc from May, and 14pc year-on-year to 43,265, they are down from a highs of 48,550 in January, according to the latest figures from the British Bankers' Association (BBA).

More dramatically, the annual growth rate of mortgage approvals has been plummeting since the start of the year, when major lenders started to introduce more stringent borrowing requirements in preparation for April's Mortgage Market Review (MMR). In January the number of approvals were rising 57pc year-on-year. This dropped to 24pc in April, before sliding to 13pc in May and 14pc in June, as shown in the graph below.

"There has been a moderate pick up in mortgage approval rates as the lenders get to grips with the implementation of the MMR. However, the falling growth rate in the number of home loans shows us that undoubtedly the tighter lending conditions have started to fundamentally suppress the mortgage market," said Lucian Cook, head of residential research at Savills.

"In March, before the MMR, the number of mortgage approvals for house purchase was rising at 41pc year on year. This has fallen to 14pc in June due to regulatory constraints," he added.

As the BBA do not release the number of mortgage applications, or the rejection rate, it is difficult to see whether the fall in approval rates is solely down to stricter lending rules, or is heightened by drop in demand as consumers contemplate interest rates expected in November.

The MMR was a move to curb the reckless lending practices seen before the last housing market crash. New rules have included future interest rate stress testing, while putting a stop to the practice of self-certification - which required little or no proof of income and allowed the self-employed to get a loan relatively easily.

These new regulations have been strengthened by additional steps taken by Mark Carney to cap the number of high loan-to-income values, as the Governor of the Bank of England remains concerned about the level of household debt and its impact on the UK economic recovery.

The ability to remortgage a home has also become much more difficult. The BBA data shows that while the number of remortgage loans is up 2pc from May to June, levels are 73pc lower than they were in the five years in the run up to the credit crunch, and 17pc lower than January.

Gross lending rose by 24pc to £11.2bn in the year to June, the data showed, linked to the runaway house price growth seen over the last 12 months. The upward trend ended this month when the nation saw its first fall in asking prices.

According to data from the property portal, Rightmove, the marketed cost of a UK home fell 0.8pc on the previous month. This was attributed to summer holidays, a distracting World Cup, rising awareness of rising interest rates, and stricter credit rules.